The budget blues

budget.jpgThe Finance Minister comes under verbal attack from some quarters every year in the months of February and March. But this year criticism is coming from all sections of the society. The usually cheered industry and business groups are expressing their unhappiness over the 2007 Union Budget. Why is this ambience of uneasiness over P.Chidambaram’s budget presentation despite the country growing above 9 percent, record inflow of foreign investments and huge cash reserves? The shooting inflation, sluggishness in agriculture, forward trading in food grains and the sudden increase in interest rates for bank loans are considered to be the villains in this happy hour of vibrant economy. Unless and until, these bad ingredients are prevailed upon, the final outcome of UPA’s recipe will be disastrous. Already the voters of Uttrakhand, Punjab and Mumbai have given shocking jitters to the ruling coalition. At this negative backdrop, the budget presented does not provide enough consolation or assurance to address the apprehensions of the nation. Higher allocation for defence and social sectors, jobs for physically challenged, attention to the rain water harvesting and commencement of concern for agriculture can be termed as the positive inputs from the North Block. From the past experiences it is clearly that the mere hike in allocation of resources is not sufficient to ensure smile in all faces. Most of the backward states do not utilize the given funds for 11 months and rush to use the bulk amount in the financial year ending month of March. Even then they cannot use nearly 40 percent of the allocated funds. In this scenario a tight monitoring and a quarterly or if possible a monthly pinpricking is essential. One cannot stop with it. It must be ensured that the funds go for the purpose meant. This is the biggest challenge for the F.M in the days to come. In order to understand the macro picture of the budget it is crucial to dissect and analyse it patiently.

Escape from tax?
Generally the Indian budget imposes taxes on the citizens and corporate companies. But this year, the FM after the strong negative dosage from his colleagues, soft tuned in the tax matters. However he managed to exploit the emotions of one and all and hiked the education cess from 2 to 3 percent. The ‘Dream Merchant” clearly knows that whatever it may come, Indian will never refuse to contribute towards education development. After all that is our strength and weakness. This increase is to fund the political fantasies – 27 percent reservation for OBC candidates in the central universities. The anti-quota lobby may refuse to pay the education cess. That will polarize the country’s opinion and put the system in hot conditions. Secondly, most of the cess paying citizens are not happy with the way in which the funds are utilized. The primary purpose of the education cess was to improve the quality of elementary education and bring more out of school into the classrooms. After three years there is no substantial change in the basic education scenario in the country. Quality seems to be missing apart from the learners. In order to take the nation in the higher path of knowledge engineered growth a thorough professional approach is needed. Not the current method of appeasement on the basis of religion and caste for the sake of votes. This may pave short term gains to the ruling party but in the long run it will ruin the foundational structures. The F.M in private may agree to this point and wants to implement performance based funding. Unfortunately his hands are tied and thought process is dictated by the political compulsions often provided in installments by his party colleagues. So the UPA is getting ready for collective collapse electorally!

Outcome budget is not heard
A person can demonstrate his sincerity by showing his performance in the past and ask for more funds to develop his vision. P.Chidambaram tried doing that for the past two years through the outcome budgets. Unfortunately very few people have gone through it and brought it to the public discussion. Even the media channels which are sweating it out 24 hours day and night did not find it worthwhile to debate. Seriously this is a bad trend in the Indian democracy. As the budget is a vital engine to carry the country forward, an objective introspection and analysis is required.

One can find only noisy discussions about the budget with three statistics repeated every where as if there are no other factors matter. The above 9 percent growth rate, amount of foreign exchange at hand and foreign direct investments. Is the growth rate the final indicator of the Indian economy? Absolutely not. From economic experts to layperson on the streets everyone is chest thumping about the growth rate. As the national security advisor exploded in an international meeting held in Geneva that the terrorists are controlling the Stock market, what is the assurance that the growth rate figures are not manipulated? My caution and criticisms are to ensure vigilance among the public regarding these statistical figures. One day the common people should not feel cheated.

The low growth agriculture is not much discussed. The advise of experts like Dr.M.S.Swaminathan are put in cold storage. Regularly he is ringing the warning bells from the official corridors and in the press. But who is there to listen to his sane advise? Driven by the powerful industrial lobby the entire establishment of the centre and states are blindly dancing to their tunes. I am afraid that they will push India back to PL 460 beggar status. Some super intellectuals are proclaiming that farm sector should be dumped and service sector be prompted with full zeal. This is a fundamentally wrong notion. As no oil nation now we are dependent on the mercy of other countries, this situation should not come to us in the food sector. F.M’s attention to the farm sector must get the applause of the rural population. Encouragement to rain water harvesting, renovation of water bodies and more credit to the kisans are positive signals. But these are tokens of support. What the farm sector needs today is that an all out support of the entire nation. It cannot be regenerated by more money alone.

Through his cool team, P. Chidambaram has brought a record 35 million tax payers and a collection of Rs.442,153 crores. Who is there to sing praises for him in this front? Ironically, his political opponents outside and inside his party are waiting to show him the door. The budget blues and electoral fallout are the easy instruments for them to corner the charming vaishti clad F.M. Clever P.C knows how to manage all those negative folks with a bright smile. But can he give smile to aam admi in the coming days?


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